Advance Auto Parts 2008 Annual Report Download - page 36

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addition to our normal annual store closings that are strategically or financially delivering unacceptable
results. These stores were assessed for impairment as of January 3, 2009 and no impairment was considered
necessary at that time.
Update on Turnaround Strategies
Our favorable results during fiscal 2008 were in part being driven by progress on our key turnaround strategies.
Each of the four strategies is at a different stage of implementation.
 Commercial Acceleration
The effectiveness of our Commercial Acceleration strategy is evident as we experienced double digit
comparable sales increases over the last four quarters in Commercial sales. For fiscal 2008, we experienced a 12.1%
Commercial comparable store sales increase. We continue to gain market share in a business that is very fragmented
and still growing overall. We have added more parts to our stores with Commercial programs, including key brands
which are highly respected and preferred by our Commercial customers. We are developing a sales force to drive
our Commercial business, another key component of the Commercial Acceleration strategy. We are increasing the
number of Commercial account managers and equipping them with tools to acquire new customers and increase the
volume of existing customers’ purchases. We are also testing other initiatives to roll out on a larger scale that meet
the needs of our Commercial customers and drive shareholder value.
 DIY Transformation
The initial focus of the DIY Transformation strategy is to turnaround our current DIY sales trends utilizing
targeted initiatives. Our DIY comparable store sales decrease was 2.3% in fiscal 2008 with our fourth quarter
improving to a decrease of 1.1%. During fiscal 2008, we completed a 100-day assessment of our DIY business
where a representative group of management and field team members worked together and concluded that we must
continue to focus on initiatives such as parts availability, attachment selling, superior customer service, and the
proper scheduling of team members. Additionally, we have identified certain operating areas where we are
experiencing positive DIY sales results which provide us with an opportunity to utilize those best practices across
the entire DIY business.
Our ability to achieve successful results in our Commercial Acceleration and DIY Transformation strategies is
dependent on our Availability Excellence and Superior Experience strategies.
 Availability Excellence
The Availability Excellence strategy represents our commitment to enhance the breadth and depth of our parts
availability in our stores, and the speed of our parts delivery, to better serve both our Commercial and DIY
customers. This strategy incorporates our supply chain and logistics network capabilities, space management and
merchandising initiatives. We are making progress on the parts availability initiative as the merchandising and
inventory management teams partner with the Commercial and DIY teams to accelerate sales growth. As discussed
in Commercial Acceleration, key brands of parts such as Moog® and Wagner® were added during fiscal 2008. We
began the rollout of a custom mix inventory process chain-wide. In addition, we reviewed our inventory productivity
and changed our inventory management approach for slow moving inventory. We intend to increase our inventory
productivity by reducing the amount of slow moving inventory and utilizing vendor return privileges earlier in the
life-cycle of our inventory which will allow us to add faster moving custom mix inventory. We believe this change
in inventory management approach will accelerate sales, improve margins and increase inventory turnover.
Progress in other initiatives included the restructuring of our merchandising department into an integrated
operating model, the completion of an initial phase of a new category management process and the roll-out of a new
price optimization tool. As previously announced, we are also implementing an Oracle merchandising system over a
multi-year period which will serve as a key upgrade to our current merchandising systems. We recently launched the
Company’s global sourcing capability and private brand strategy. In February 2009, we announced the outsourcing
of our private vehicle fleet, which will allow more scheduling flexibility and reduce costs to help fund the expansion
of our PDQ® network. We will continue to measure progress in our Availability Excellence strategy, using